Pears family in £90m hotel sale to UBS fund

UBS Asset Management’s Real Estate & Private Markets business has launched a new long-income UK property fund with the acquisition of five UK hotels from the Pears family for a combined £90m, reflecting a yield of 5.25%. The hotels, comprising 650 bedrooms, are all let to Compass Group on 15-year lease terms that began in October last year and are subject to 2.5% annual uplifts. They are located in Swindon, Oxford, Stratford-upon-Avon, Nottingham and Northampton, and provide a total current rent of £4.8m per annum. The initial £90m of equity in the fund used to acquire the hotels was provided by a major UK local government pension plan. UBS said it was now in talks with more potential investors in the UK and overseas. Its new open-ended fund is targeting a net income return of 5% per year, focusing on alternative sectors. It will offer investors the opportunity to access a portfolio of UK long-lease assets benefiting from indexed rental increases. In addition, UBS said, the fund will target assets with a strong underlying site value, embedding capital-preservation characteristics into the portfolio. Howard Meaney, head of real estate UK at UBS Asset Management’s Real Estate & Private Markets business, said: “The stable long-term, indexed income generated by long-lease property offers an attractive alternative for investors, and at the same time provides diversification benefits to the rest of their fixed-income and property portfolios. “We are seeing a clear demand for this type of product from a broad range of clients seeking long-term, sustainable income streams, particularly those with liability-matching commitments. We look forward to growing our long-income portfolio as we continue to expand the fund’s investor base.” Lewis & Partners advised the Pears family; Tudor Toone acted for UBS. The hotels A 130-bedroom hotel and conference centre spread over 13.9 acres. Ettington Chase features 15 flexible meeting rooms, a 120-seat restaurant and a leisure centre with an indoor swimming pool, gymnasium, jacuzzi, sauna, steam room and two outdoor tennis courts. Passing rent of £713,667 per annum. A 152-bedroom hotel and conference centre, located in a mainly residential area, covering 20.8 acres. Features include a spa and gym with a heated indoor swimming pool, sauna, steam room and a studio for classes of around 20 people. Passing rent of £1,133,472 per annum. A 150-bedroom hotel and conference centre covering 37.1 acres. Its conference centre has a total capacity of 2,153 and it has a 180-seat restaurant. In addition, it has a leisure centre with an indoor swimming pool, gymnasium, jacuzzi and steam rooms. Passing rent of £1,259,413 per annum. Spanning 14 acres, Sedgebrook Hall is a 104-bedroom hotel and conference centre. Its conference centre can accommodate 200 people, alongside a 90-seat restaurant and 40-seat bar/lounge. It includes 22 flexible meeting rooms and has leisure facilities with an indoor swimming pool, gymnasium, sauna, steam rooms and beautician treatment rooms. Passing rent of £545,746 per annum. A 121-bedroom hotel and conference centre, 12 miles south of Oxford, covering 21.79 acres. It has 20 flexible meeting rooms and a maximum conference capacity of 170, alongside a 100-seat restaurant, three private dining rooms, a bar/lounge and leisure centre with an indoor swimming pool, gymnasium, jacuzzi, sauna, steam rooms and treatment rooms (operated separately). Passing rent of £1,175,452 per annum. To send feedback, e-mail louise.dransfield@egi.co.uk or tweet @DransfieldL or @estatesgazette